Gambling companies with online components will do better

The respected Moody’s Investor Service has published a review on the future prospects of the gaming industry in Europe, noting that companies with greater online gaming exposure are likely to experience higher growth next year.

However, most rated companies are highly exposed to mature segments of the gaming industry, which is expected to remain broadly flat.

Moody’s expects a rise in disposable income in 2016, albeit at a slower pace than 2015 in some European countries, which should drive gaming activity.

The company’s “Gaming — Europe: 2016 Outlook — Modest Wagers Growth Supports Stable Outlook Despite Ongoing Cost Pressure” review predicts that the UK, Germany and Spain will all benefit from a stable economic environment, while Italy’s economic recovery remains slow, dragging on its gaming industry performance.

“We note that regulation and taxation will continue to pressure revenues, profits and profit margins in 2016, but the impact will be less pronounced than in 2015,” the review concludes. “We do not expect any new major regulatory changes next year, except in Italy where provisions of the draft 2016 Stability Law propose taxation increases that would affect revenues and profits.”

Moody’s anticipates continued cost optimisation efforts and M&A activity as companies seek to offset increasing compliance costs and taxes.